NORTH AMERICA – The New Jersey Division of Investment will be looking into the possibility of offloading as much as $1bn (€750m) worth of limited partnership positions in real estate funds.
Pension funds that have made investments in closed-end commingled funds generally have little control over their capital. To exit the fund, investors often must take a loss.
New Jersey, which has placed capital into 20-odd commingled funds, declined to comment on which would be targeted for sale.
One of the funds it does have some control over is the Blackrock Diamond Property Fund, a core open-ended fund managed by BlackRock Realty the pension fund could exit by issuing a redemption queue.
According to New Jersey's website, the Diamond fund has not been one of its better performing investments.
The pension fund made a $50m commitment into the fund in November of 2005.
Some of New Jersey's worst performing commingled fund investments have been five non-core funds that have a large exposure to European real estate.
The pension fund said in a board meeting document that these funds for fiscal year 2012 had returns that were down approximately 14% on a weighted basis versus the European REIT index and the European private real estate index.
The pension did not identify the funds, saying only that the investments had not worked well for real estate in 2012.
At a recent board meeting, New Jersey set out its new investment initiative for this year, with one goal being to further diversify the portfolio geographically by expanding non-US investment.
The pension fund declined to comment on how much capital would be allocated or which countries would be targeted.